IPL 2016 brand value

Even if the Indian cricket board manages to find a way to have eight teams in next year’s IPL, the brand value of the twenty20 league will dip by about 15%, said global valuations firm American Appraisal. The drop in valuation will be due to the fact that the two new teams will have to start from scratch and will find it difficult to attract sponsorship than an established brand with loyal followers.

“The new teams will certainly have an uphill task. The existing teams may garner the same level of revenues that they were garnering but when they come to the negotiating table for the next deal, there might not be as much of an increase as they would have had if everything was going smooth,” said Varun Gupta, managing director of American Appraisal India.

Something similar happened when Sunrisers Hyderabad replaced Deccan Chargers. At that time, the value of the new team declined by about 30-40%, said Gupta. Then there’s also the instance of the two new teams — Kochi and Pune — that entered the IPL only to make early exits. Chennai Super Kings is a very big team and their matches are always rated very high alongside Kolkata Knight Riders and Mumbai Indians. The MI-CSK final of IPL 8 was rated 7.4, according to data from TAM Media Research. Even league stage matches played by these teams performed better than other matches. “If the current CSK team is missing from the tournament next year, the overall value will certainly decline. It is the most followed team in IPL and the value it provides to advertisers and sponsors is also very high,” said a media planner who did not wish to be named.

With two new teams starting at the bottom, advertisers are surely to drive a hard bargain, said Nandini Dias, chief executive officer at media agency Lodestar UM. “We would definitely bargain lower with them by about 20-25% than established teams,” she said. She, however, does not see the overall IPL brand getting impacted despite the tournament getting embroiled in controversies in the past few years. IPL’s reach has, in fact, grown from 100 million in 2008 when it started to 192 million this year. “This year was good for the broadcaster but it might not be able to raise prices next year,” said Dias. The media planner quoted above said that if this controversy continues for some more time, the next edition of the league could see a lot of distress selling by the teams and also by the broadcaster.

Advertisers and sponsors too are not happy with the happenings in IPL. A top official at a leading global firm which has invested heavily in IPL said that the issues surrounding IPL have to be cleaned up at the earliest. “Valuations are eroding and the lack of two plum teams directly impacts our marketing plans and how much we could have leveraged from our investments. The matters are taking too long to be resolved,” the person said, not wanting to be named as his company is still involved with the league.

The chief executive of a top consumer goods firm chose to draw comparisons with the FIFA corruption controversy. “In case of FIFA which is also hit by controversy, large sponsors like Coca-Cola and McDonald’s have openly and formally demanded third party independent probes and internal reforms. After all, it’s their money. But that’s not possible in the case of IPL — there are too many coteries and lack of transparency here which creates an environment where companies are hesitant to openly speak up,” he said.

Note : This report posted on Jul 23, 2015 so figures may different as current